Policy and Regulation News

Transparency Limited for Medicaid 1115 Demonstration Waivers

CMS and Medicaid agencies provide limited transparency about the eligibility impacts of 1115 demonstration waivers.

medicaid 1115 demonstration waiver

Source: Thinkstock

By Sara Heath

- CMS and state Medicaid agencies are not always transparent about the consequences of 1115 demonstration waivers, specifically about how various demonstrations might impact beneficiaries, according to a recent report from the Government Accountability Office (GAO).

The report outlined the purpose of 1115 waivers, stating that these demonstrations grant new flexibilities to states. States may submit 1115 waiver applications to develop and experiment with new and innovative care delivery methods.

“Under demonstrations, states have extended coverage to populations or offered services not otherwise eligible for Medicaid and implemented policies aimed at improving delivery systems,” GAO explained. “Recently, CMS has issued guidance to states indicating its intent to bring additional flexibilities to Medicaid, including allowing states to provide beneficiaries with incentives to work, such as by requiring beneficiary participation in work or community engagement activities to maintain their Medicaid eligibility.”

These demonstrations are common across the country and are quite the financial undertaking. More than three-quarters of states have at least part of their Medicaid programs operating under an 1115 waiver. These programs represented nearly one-third of Medicaid spending in 2016, GAO reported, with demonstration costs totaling at about $108 billion.

Despite the enormity of topic, state Medicaid agencies and CMS have not been entirely transparent about these waivers, especially as it relates to beneficiary eligibility.

To be clear, CMS has long mandated some level of transparency about the proposal, review, and implementation process for 1115 demonstration programs. States must disclose information about program monitoring and evaluation to CMS to ensure that the demonstration is actually improving beneficiary care or experiences.

“CMS reviews demonstration applications (including for new demonstrations, extensions, and amendments to existing demonstrations) for their compliance with applicable transparency requirements, including that states seek public input on their applications,” the report authors said.

“CMS’s procedures involve reviewing incoming applications for new demonstrations or extensions against detailed checklists the agency designed to align with transparency requirements in the regulations,” they added.

But efforts to monitor Medicaid 1115 waivers are nonetheless limited, as CMS lacks protocol for waiver oversight. Specifically, CMS lacks protocol for when states fail to submit major changes to their demonstration applications.

The agency likewise has limited protocol for monitoring changes to existing demonstration projects. Medicaid programs do not need to submit public comments on their changes, nor do they need to provide information about changes to beneficiary eligibility following a program change.

CMS also does not require Medicaid agencies to report on the expected increase or decrease in enrollment. Most states therefore do not disclose this information, GAO reported.

“These gaps may leave the agency and the public without key information to fully understand the potential impact of the changes being proposed, including on beneficiaries and costs,” the report authors noted. “These risks take on increased importance given that CMS is encouraging states to use the flexibility provided under demonstrations to test changes to their Medicaid programs that could have significant effects for beneficiaries and other stakeholders.”

Furthermore, CMS offers little clarity about state obligations to notify the public of changes to the demonstrations. In Arkansas, where community engagement requirements put coverage in limbo for some beneficiaries, CMS did not require a public notification of the requirements. Beneficiaries impacted by the updates did not necessarily know that changes were afoot, GAO said.

As more Medicaid plans explore 1115 waivers – projects to address the social determinants of health and to institute community engagement requirements are most prevalent – CMS should reconsider its review process, the authors said.

“CMS should develop policies for ensuring transparency when states (1) submit major changes to pending demonstration applications and (2) propose amendments to existing demonstrations,” the report concluded, noting agreement from HHS.